Pony in the Pile

This week’s Interact 2008 conferencemad men 2.png — all things interactive media — began upbeat enough, with Ted Leonsis‘s inspirational keynote signaling an ‘anything’s possible, mix-and-mashup’ world of opportunity where entrepreneurs can offer (and perhaps find) fulfillment by providing one of the five keys to self-actualization: relationships, community, self-expression, giving back, or pursuing a higher calling.

But then, the sky began to darken.

With each successive speaker and panel, the mood turned increasingly somber, until by the end of the afternoon — terrabanged by the announcement of the failed bailout and a Dow plummeting 777 points — somber turned to sober . . . and the ad/marketing audience lit out to quench the condition at Happy Hour.

Actually, Leonsis foreshadowed the day’s drama with his own sobering statement: “Today, a marketing person needs to be a mathematician,” and not the English major that he was. Everyone knew exactly what he meant, of course. It’s about metrics, and testing, and deliverables that can be measured — a theme echoed several times during the day. Google VP of Search Product and UX Marissa Mayer talked about nuanced A/B testing, where reducing spacing a single pixel-width — or bathing paid search in a field of yellow rather than blue — resulted in 20% to 40% more click-throughs. Launchbox Digital‘s Sean Greene had asked the panel he was moderating on ‘The Evolution of Advertising Models’ what the near-term effects of the dismal economy would be on ad spending, and the unanimous response was “a shift to what’s measureable” (hopefully, social ads in search of the elusive ‘engage’ metric won’t be left twisting in the wind).

You could almost feel the room heave a collective sigh: “We know, we know — we need to bone up on this technical widgified social media stuff.”

But there was little letup. Avenue A/Razorfish‘s Joe Crump was nearly morose, acknowledging (in a talk aptly titled ‘Digital Darwinism’) that not only is the rate of change of technology overwhelming, but current org charts are woefully ill equipped to deal with it in creative organizations. By early afternoon, Adobe evangelist Duane Nickull and Clearspring CEO Hooman Radfar had applied a thick coat of glaze discussing SOA (tell the truth: did you know that it stands for Service Oriented Architecture?) and widget distribution strategies. Finally, the afternoon wrapped with a panel presenting a glass-half-empty outlook for interactive media employment that could be summed up as a grey-hair lament something like: “We need to hire more whiz kids that understand this stuff . . . but they’re a dickens to manage.”

Good thing we entrepreneurs are optimists. Why, there must be a pony in this pile!

The great words of someone famous come to mind: Out of adversity comes opportunity (or is it creativity?). Either way, there’s a dislocation, a discontinuity, a gap that begs for a solution. Here, the gap is agencies’ and marketing departments’ inability to keep up with technology of social media. So might be the solution?

Maybe training.

Maybe analytics tools or services.

Maybe app-building for hire.

Now, Crump shouldn’t actually be complaining — of Avenue A/Razorfish’s 500 employees, 200 are technical. But I’m not sure any of the best and the brightest (you know who you are) want to bury themselves in an agency with a salary and long hours.

So what’s the entrepreneurial play here?

Although VCs have historically shied away from service businesses — the multiples were usually far greater in product businesses — that scenario has changed. And in fact, it could solve several problems at once. If you’re dismayed that VCs want you to recite your revenue model (even though, like me, you expect you’ll figure it out once users have embraced you), there could be an alternative to raising money altogether: How about getting paid for what you love to do (and do well)? If in the course of providing your service, you’re also building a product, or developing some intellectual property (IP), then you’re in fact building equity in a service business.

I wrote about BuddyMedia creating ‘branded’ Facebook apps (They actually received funding from Bay Partners and others), and they’re a good example of ‘filling the gap’ for big agencies. But a better example may be Set Consulting. President/founder Jared Goralnick is passionate about productivity, and Set gets paid to improve clients’ productivity. But in the course of doing his work, Goralnick also built a product — AwayFind — aimed at avoiding ‘email bankruptcy.’ Voila! . . . a cashflow business, with an equity kicker.

And no VC. Ironically, when you get that combination working for you — and you really don’t need the money — is when the VCs come a-knockin.’

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Transparency and Handling

Transparency happens to be the number one search term for this blog. Don’t ask me how it happened. I’ll simply say that I talk about honesty and transparency quite a bit. The reason is that it is the cornerstone for business and brand.

Today at the Interact 2008 conference, AOL founder Ted Leonsis dropped a bomb on a largely communications oriented audience. Having a “special place in my heart” for public relations and marketing, I can tell you that your industry is the one that is most in need of transparency.

Of course, your industry is not the only one needing transparency. Anyone in business needs transparency as it is the cornerstone of trust and brand loyalty. However, public relations more than any other industry in my book needs to be transparent. Transparent with customers. Transparent with the press and bloggers. Transparent with clients.

Ted notes that many of your [Public Relations] clients are asking for handling. What they don’t realize is that the more handling they have, the more they will be rejected.

Pure and simple, handling eliminates flaws. It’s the photoshopped model on the magazine cover. It’s plastic. It’s memorex. And, let’s be honest, consumers see right through it. It’s deceptive and in todays age of user-centric communications, plastic is the downfall of traditional communications. It’s all about transparency.

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Don't ask questions, give them answers.

I like the group at Ars Technica. They do some pretty unique things and have a great mix of content on their site. But when it comes to policy coverage, the blog-like style they use sometimes encourages shortcuts or causes a story to miss big details.

For instance, Sunday night, Matthew Lasar wrote a post about the FCC’s consideration of rules governing “embedded ads” (product placement). While he touched on some good points, he missed a few things that you’ve just gotta have if you’re gonna write about telecom policy.

First off, he immediately divides the debate into two sides, a “good versus evil” mentality:

As the filings stream in during the Federal Communications Commission’s proceeding on what to do about embedded advertising, one thing is clear: you are either for a crackdown on the practice or against one. If you are a public health or consumer advocacy group, you belong to the first category. If you speak for the media companies and broadcasters, you are firmly ensconced in the second.

One side sees embedded ads as an intrusive, dishonest, and unhealthy innovation. The other sees product placement as the new foundation of the media’s economic well being. It is really that simple.

I’ve read Mr. Lasar for a long time, but having covered this issue myself, and actually spoken to some of the policymakers and advocates on both sides, I felt his subsequent quotations of written comments without a deeper discussion of the difference between commission authority over broadcasters versus cable content, FCC initiatives to deal with cable pricing and content (so-called a la carte pricing), and the known views of the commissioners themselves left much to be desire, especially when he closed the post like so:

All these commentaries grapple with the complex questions swirling around the product placement regulation issue. Does the FCC have statutory authority to make new rules? Does the First Amendment restrain the agency’s hand? Does the Children’s Television Act already guard children’s TV shows against embedded advertising?

But beyond these concerns, a prominent divide on the issue stands out. Consumer advocates see product placement as a clear and present harm to civil society. Big media sees it as the future.

For one, I believe the job of a reporter or blogger is to attempt to answer the questions. Dig deeper. Find out the why behind the what instead of assuming motives. Most importantly, talk to someone. Both as a solo blogger and during my time at Communications Daily, I always made it a point to talk to sources and experts, not just regurgitate written statements. Granted, I’m in D.C and have been around the industry for a while, but it doesn’t take much effort to get a hold of someone in this town, especially if you’ve been bought by Conde Nast, and your publication has hired a damn fine journalist to run the Ars D.C. operation.

I know FCC issues can be complex, and for an “outsider” they can easily be reduced to black and white. But there is a serious lack of in-depth technology policy coverage on the web, good coverage that exposes the many shades of gray and layers in these issues. There is a real need for it, so If you’re going to do it, do it right. That means more than quoting comments, adding some editorializing and posting it. The job of a good reporter or blogger isn’t just to ask tell your readers what the questions are, it is also to FIND THE ANSWERS, or at least to try, in order to get the truth to those readers. The record in this case is sufficient not only to require background and context, but the issue is important enough that reporting on it should get more than a few cut-and-pastes. Get on the phone and talk to someone who knows more than you do. That’s what I always did, and whenever possible, I still do.

The following is a comment I posted on Ars forums in response to the article. It’s not an attack on anyone, or anyone’s work. What it is (I hope,) is an attempt to fill in the blanks and provide some background as to the questions raised in the article and how some of the issues it raised came to be.

While I appreciate the effort to cover this issue, you’ve missed several important distinctions that significantly impact the debate and readers should consider.

First of all, no one disputes the Commission’s authority over broadcast television, and no one disputes the fact that “embedded advertising” (which is really a fancy word for product placement) must be disclosed. As you already reported, you’ll see the disclosures fly by in ending credits. This is not controversial at all. Rules governing advertising on broadcast television fall under the “public interest” test the FCC must apply to its decision-making process. Product placement has been around for years, but its increasing frequency and the changing advertising market that NAB admits to both demand that the commission re-examine current rules to make sure that broadcasters are satisfying the “public interest” obligation they must meet in order to keep their licenses.

Second, the NPRM would not be making any new rules with respect to children’s programming. What the Commission wants to do is clarify the existing rules to make it clear that embedded advertising is prohibited under the existing ban on advertising inside children’s programming. The requirements of the Children’s Television Act are not in dispute here. The FCC is obligated to make sure their rules carry out the intent of statute, and this means making sure that the rules do not fall out of date with respect to changing technologies.

Whether or not the ban applies to cable programming in addition to broadcast television is part of the larger issue of how far the commission’s authority extends over cable programming. The extent that a channel is a subscription service is an important factor in making this determination (for the same reason that HBO can be racier than TNT). The cable industry could remove any doubt by offering channels a la carte, something NCTA has consistently and strongly opposed, much to the ire of Chairman Martin.

While the FCC has not chosen to heavily regulate cable programming out of (legitimate) First Amendment concerns, a move to further regulate product placement in broadcast television, would surely “trickle down” to the basic cable channels that carry vast amounts of second-run and syndicated broadcast content in addition to original programming.

Where the cable industry in particular has a vested interest in keeping product placement rules the same is they are now in the process of rolling out their new Tru2Way interactive content platform as well as moving to all digital networks. Digital technology will eventually allow much more addressable advertising based on programming choices and other viewing habits in addition to location and time slot. If ordinary product placement must be disclosed more clearly, the industry’s ability to sell ads in interactive programming and games (which could be targeted to children) could be in jeopardy.

The commission has already reached a “broad consensus” on clarifying the existing ban on advertising to children, according to Commissioner Jonathan Adelstein (D). But Chairman Martin has not called for a vote on the issue. Nor has he called for any vote on re-examining rules governing product placement and disclosure.

With respect to the children’s programming ad ban, Commissioner Deborah Tate (R) has been a strong advocate for child safety and protection, but has declined to say publicly whether she supports clarifying the ban on ads in children’s programming. When the House adjourns, her term will expire, leaving an open seat and increasing the likelihood of 2-2 party line votes that would prevent rules from being adopted in absence of a majority.

Framing this debate as “big media versus consumers” oversimplifies what is a combination of far more complex issues that have been out there for years and are an inevitable consequence of the FCC’s legal obligations as well as the constitutional constraints it operates under. And while you’ve based much of the article on the public comments, you don’t include much information on where the Commissioners themselves might stand. Nor do you attempt to provide any background on the subject of FCC’s lack of explicit statutory authority over cable television content (and the a la carte pricing debate that springs from it) or any analysis from industry experts that would allow you to give readers a better view of the issue than just “consumers versus media.”

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